September 2011

If you’re upset about Bank of America charging a monthly debit card fee or any other fee, if the bank has a policy you don’t like, or if you just have no need for this company’s particular set of services, consider closing your Bank of America account. There’s an initiative called Bank Transfer Day encouraging customers to remove money from large banks.

In a perfect world, every bank would make it very easy to close accounts. For the most part, they want to keep their customers, and will often request that anyone wishing to close their account talk to a retention specialist. These specialists are often empowered to offer a few incentives to remain a customer of the company, including waiving fees for a period of time. It’s a tactic that sometimes stops people from leaving, particularly those who do really want to stay. It’s a negotiation technique used with employees in the corporate world; if your company wants to keep you, when you threaten to quit they might make it more attractive for you to stay.

In most situations, if you want to quit, it’s better to quit than accept a peace offering without solving the problem of not wanting to be there. So it’s best to avoid or ignore the retention specialists who want you to stay with a bank.

Note: Some readers have had success by entering an online chat with a Bank of America customer service representative and asking to have their accounts closed. Some readers have said that they were unable to do so.

Before you begin the process described below, log into your account and initiate a chat. You may find the closing process is as easy as sending an instant message. The Bank of America website has been non-responsive or slow over the past several days, so accessing online chat may be impossible or difficult.

If you are unable to access your account online, or if you are and a representative who answers your request live is unable to close your account, you might need to proceed through the longer process, and this process varies depending on the state in which you reside.

To close your account at Bank of America, you should just be able to walk into a branch, withdraw your funds, instruct the teller to close the account, and walk out a free man or woman with a cashier’s check or cash in hand. It’s not always quite this simple, however.

California, Idaho, and Washington are the only states that officially let you close your account just by walking into a bank branch, according to Bank of America’s official procedure. Residents of all other states must follow a different process, but I find it hard to believe that any American can’t walk into their local branch and get this done. Bank of America insists that most customers throughout the country — those living in the 47 states not mentioned above — send a letter stating your desire for the bank to close your account and describing how the remaining funds should be distributed to you.

For example, your letter might state that you want to receive your funds via check to an address you provide, or you might request that your funds be transferred via ACH to the external account you specify (including the destination’s routing/ABA number and bank account number). The letter, including a signature from each account holder, must be sent to this address:

Account Closure, FL1-300-02-07
4109 Gandy Blvd
Tampa, FL 33611-3401

You can verify the process for closing your Bank of America savings or checking account by visiting the bank’s website and finding the answer in the frequently asked questions list after providing the state in which you reside. Once you close your account, consider depositing some cash in a high-yield savings account or a credit union.

Do you plan to cancel your Bank of America account? If so, why? If you have closed your account, what did you think of the process?

Last month, I noted that Wells Fargo was to begin testing a $3 debit card monthly fee in some areas of the country. Since the recession, banks are looking for more ways to generate profits from depositors. Historically, banks turned deposits around and approved loans for borrowers at higher interest rates than what was paid on deposits, but with loan interest rates remaining low, the financial industry is not satisfied with current profits.

More recently, banks have benefited from swipe fees or interchange fees, where card issuers receive a small payment for every transaction. These fees have been a significant source of revenue for banks; in fact, the cost for banks to provide merchant services is significantly less than the revenue from fees. As a result, new regulations, intended to help small business owners who absorb the cost or pass it onto customers in the form of higher prices, enact limits to interchange fees. The most obvious solution to a squeeze on revenue from one source is to find another willing source.

In this case, banks are beginning to charge depositors directly.

Bank of America is initiating a new monthly fee of $5 for debit card use. Regardless of whether a Bank of America customer uses a debit card in “credit mode” (usually a signature-based transaction, though in some situations signatures aren’t necessary) or in “debit mode” (a PIN is required), as long as he or she has one transaction in a month, the bank will deduct $5 from the account at the end of the period.

While there is something to be said for customers paying a service provider — a bank — for the services it provides — immediate access to their money stored safely in checking and savings accounts, this isn’t the model for savings and checking account access the country has come to accept over the past century.

The good news is customers still have choices.

Unfortunately, many Bank of America customers will continue blissfully unaware that there have been any changes. Some will notice the new $5 fee after receiving the first statement after the debit card fee has gone into affect, and some will notice months later — or perhaps never. Perhaps this is justified punishment for not managing finances closely. Some will know about the fee but not care enough to make any changes. $60 a year on a $30,000 annual income is not a significant expense at 0.2% of income.

If, however, you keep an average of $1,000 in your checking account, a fee of $60 a year is 6% of your balance. That is an insane fee considering the benefit the bank provides. You’re better off — much better off — with any alternative.

Carry around cash. While this will save money from a few different perspectives, it is not an ideal situation for everyone. If you regularly make a lot of transactions and need to carry a significant amount of cash on your body at all times, you’re putting your cash at risk, whether the risk comes from a capacity for misplacing your wallet or getting mugged. Another benefit is that on average people spend less with cash than they would with plastic due to the psychological effect of taking bills from your wallet and giving them to someone else.

One potential drawback, especially for spenders who are aware of the psychological disadvantage and work to control their spending with plastic, is they lose the benefit of receiving statements outlining their spending. For someone who tracks her finances, that might mean keeping a collection of receipts and making notes in a pad whenever she doesn’t receive a receipt. Cash is an accounting nightmare.

Switch banks! This is an approach I highly recommend. It would take a significant amount of customers to send a message to a bank by closing accounts and taking their business elsewhere. I don’t expect banks who have chosen to implement these debit card fees to ever go back to the free model. Many banks, particularly smaller regional and local banks, have not begun nickel-and-diming their best customers. Credit unions, as well, pride themselves on being customer friendly; after all, the shareholders of credit unions are their customers, so there is no friction between the institutions pitting the needs of the owners against the needs of the customers.

Go and do it today. It will only take a few minutes; move your money out of any bank that plans to charge a monthly fee for using your debit card, which as of today includes these major banks:

Bank of America

JP Morgan Chase

Wells Fargo

There’s a new initiative called Bank Transfer Day, encouraging consumers to pull money out of big banks and into credit unions by November 5, 2011.

New Jersey has been gaining a worldwide reputation thanks to the plethora of newer television programs featuring the state. It may have started with The Sopranos, but Jersey Shore, Jerseylicious, The Real Housewives of New Jersey, and Jersey Couture have continued. The state government has been providing a tax credit encouraging filmmakers to bring their production to the Garden State. The incentive hasn’t resulted in New Jersey becoming “Hollywood East” as was either hoped or feared, depending on your point of view, when the state created the tax credit.

New Jersey is not alone in this approach. New York City has offered a similar tax credit to bring film production to the east, benefiting many films and television series, and along with film production comes many jobs.

The tax credit in this state doesn’t just apply to entertainment about New Jersey. Parts of the film Transformers 2 was filmed here, as well. I haven’t seen the movie, but as far as I know about the film, there’s nothing included that could tarnish the reputation of the state’s citizens, unlike some of the other projects filmed here. Most notably, Governor Chris Christie singled out Jersey Shore. In his role as governor, Christie has revoked the $420,000 tax credit for production of the series filmed for MTV. As a New Jersey resident, I’m acutely aware that the personalities of the characters on Jersey Shore don’t reflect the reality of the greater community within the state.

I don’t necessarily think the tax credit should be repealed based on a show’s content, however. The goal of the tax credit is not to encourage marketing in favor of the state’s reputation (propaganda) or tourism, but to bring an industry and that industry’s jobs to the state, many of which might not have been here otherwise.

It’s valid to argue that the tax credit shouldn’t exist in the first place. Producers would naturally gravitate towards locations where it is more economical to produce. A tax credit gets in the way of market forces. I’m fine with tax credits for certain industries if it benefits the state economically, and it’s easy to see that the tax credit program for filmmakers does that. As a New Jersey citizen, I’d prefer hat the tax credit be used to produce quality entertainment, but that’s a judgment call. It’s an opinion, and one that the government shouldn’t be using for policy decisions.

The governor most likely wants to kill the tax credit altogether, and is just using Jersey Shore as an example of entertainment that “uses” the credit to enhance the negative reputation of its citizens. He understands that appealing to the state’s reputation could be an easier fight than killing a job-producing tax credit on its merits as government intrusion on a free market. I’m no fan of Jersey Shore, but either kill the tax credit entirely or don’t arbitrarily decide who should receive the benefit. Move the funds to the marketing and tourism budget if the government decides funds should be dedicated only to entertainment that sheds a positive light on the state.

Sears introduced the Discover Card in 1985 and sold off the business to the independent company Discover Financial Services. Over the last few years, Discover has made some excellent strides in strengthening their somewhat ill-respected brand by expanding coverage. The company’s credit cards are now accepted almost everywhere Visa, MasterCard and American Express are.

Discover offers credit-seekers a pretty good mix of consumer-focused cards with typical features like cash-back rewards, low rates and travel perks. Chase, Capital One, and other major issuers are tough competitors for Discover, but the company is moving in the right direction by offering a varied selection of credit card products.

Here are the best credit card offers Discover is presenting to consumers today.

Discover it® – Cashback Match™: The Discover it card is one of the best cash back credit cards on the market, similar to the best cash back cards from other issuers, offering 5% cash back on rotating categories every quarter and 1% cash back on all other purchases. In addition, Discover doubles your cash back the first year. The card currently offers a 0% introductory APR on purchases and balance transfers for 12 months. There is no annual fee. And as with all Discover cards, you get free access to your FICO score.

Discover it – 18 Month Balance Transfer: This card is virtually identical to the standard Discover it card above. The difference is the 0% offer. With this card, as the name suggests, you get 0% on balance transfers for 18 months. In exchange, the 0% offer on purchases is reduced to six months. This version of the card is ideal for those that want to transfer high interest credit card debt.

Discover it Chrome: The Chrome version of the Discover it card is ideal for those who hate rotating categories. Rather than 5% cash back on select categories that change each quarter. Instead you get 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases every quarter. There is no sign-ups needed. All other purchases receive unlimited 1% cash back on all your other purchases. There is no annual fee.

Discover it Miles: This is Discover’s travel card. It’s essentially a 1.5% rewards card. You earn 1.5x miles on every dollar you spend in purchases. These miles are doubled after the first year. You also get up to a $30 credit each year for in-flight wifi fees. There is no annual fee.

Discover it Secured Credit Card: For those with limited or bad credit, Discover offers a secured version of its card. A security deposit of at least $200 is required, which also is the credit limit. Cash back rewards are the same as with the Chrome version of the card. There is no annual fee, and Discover reports your payments to all 3 credit bureaus. You get free access to your FICO score and Discover will review your account after 12 months to see if you can get your security deposit back.

Discover it for Students: This card is a student version of the Discover it card. The cash back rewards are the same, as is the cashback match after the first year. In addition, you get $20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years. There is no annual fee.

Discover it Chrome for Students: And for those that don’t like rotating categories, Discover offers the Chrome version for students. The rewards are the same as the regular Chrome card, and you get the same $20 bonus for good grades as with the other student card. There is no annual fee.

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